New Hope For Dodging Sequester

Aug. 4, 2013 - 03:45AM
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Senate Republicans and senior White House officials have quietly begun talks about the kind of sweeping fiscal legislation needed to lessen or void sequestration, raising hopes of a deal from miniscule to slight. (Karen Bleier / AFP)

WASHINGTON — Senate Republicans and senior White House officials have quietly begun talks about the kind of sweeping fiscal legislation needed to lessen or void sequestration, raising hopes of a deal from miniscule to slight.

In a series of interviews last week with GOP senators involved in the talks, the lawmakers confirmed the negotiations — which will kick into high gear this fall — have begun covering what they agree upon and what they don’t. The former includes finding a way to ease the pain of twin $500 billion defense and domestic cuts, while the latter includes simply agreeing on the size of the federal deficit.

To turn off the defense cuts, which were set in motion this year, White House officials and lawmakers would have to replace them with about $450 billion in other deficit-reduction measures. But congressional Democrats and President Barack Obama are demanding any GOP plan to do so also must include a way to replace the pending domestic sequestration cuts, which have hit domestic programs they favor.

To be sure, the much-anticipated “grand bargain” talks — delayed for months while Congress haggled over issues such as gun control, immigration reform and student loan relief — are in their embryonic stages. But they began in recent days differently than in previous attempts to strike the big fiscal deal that has proved so elusive.

“People are having serious discussions now about how to go forward,” Sen. Bob Corker of Tennessee, one of the Republicans whom Obama has courted, told reporters July 31. “We’re dealing with the brain trust of this issue.

“We’re spending a lot of time with their chief of staff, their head fiscal person, [and] Sylvia from OMB,” Corker said. He was referring to White House Chief of Staff Denis McDonough, Deputy White House Chief of Staff for Policy Rob Nabors and Office of Management and Budget Director Sylvia Matthews Burwell.

That means the foundation for a possible fiscal deal is being laid not by Obama and congressional leaders, but by compromise-minded Senate Republicans and White House staffers eager to hand their boss a domestic policy feat that would be rivaled only by the passage of his controversial health care reform law.

The talks have produced common ground on some ways to potentially lessen the defense and discretionary cuts, senators told Defense News.

“I think there is commonality around the fact that we can substitute some mandatory spending reductions for some discretionary spending reductions,” Corker said. “It’s a more balanced way of looking at deficit reduction. You get the same amount of deficit reduction, but over the next 10 and 20 and 30 years, it makes our country much stronger.”

Sen. Lindsey Graham, R-S.C., who has been involved in talks with the White House, said he is “increasingly hopeful” about a long-term fiscal agreement being approved and signed this year.

Democrats Not Welcome?

As the talks get started, Senate Democrats largely are on the outside looking in.

“We’re all talking to each other,” Sen. Chuck Schumer of New York, the chamber’s No. 3 Democrat, told Defense News. “Though I think those are separate talks.”

Obama and senior White House officials believe the path toward a grand bargain, or even what’s called on Capitol Hill a “mini-bargain,” runs through the Republican caucus room just off the Senate floor.

“I think people realize now that having a discussion between the White House, Republicans and Democrats is not fruitful,” Corker said. “The White House is talking to groups on both sides — but people being in the same room right now…” he added, shaking his head to emphasize that three-way talks are likely to fail.

When asked about grand bargain talks, budget-minded Democratic senators often shrug. They note being aware of high-level talks, but quickly add they have not been asked to participate.

“[Obama has] reached out to Republicans so much that some of my Democrats are jealous he’s been with them so much,” Senate Majority Leader Sen. Harry Reid, D-Nev., told reporters July 31.

Ideological Divide

Though such optimism — however faint — has appeared in the hallways of the Senate, even members involved in the White House talks acknowledge selling their colleagues on any GOP-administration deal will be tough.

For instance, House-passed and GOP-written fiscal and budgetary legislation protects Pentagon spending — but at the expense of Democratic-favored domestic programs.

Senate Appropriations Committee Chairwoman Sen. Barbara Mikulski, D-Md., on Aug. 1 criticized House Republicans for building a legislative “moat around defense so that all $91 billion in cuts come out of domestic funding bills.”

The previous day, Obama, during a closed-door meeting with Senate Democrats, indicated he will not support giving “special treatment” to Pentagon spending during the coming fiscal talks, including the House’s “moat” approach, said members who attended that session.

That could prove a hurdle too high for pro-military House Republicans.

“We raised taxes. We had a big tax increase in January,” House Armed Services Committee Chairman Rep. Buck McKeon, R-Calif., told Defense News. “Now, before we do any other further talk of more tax increases, we need to get back to what we all know is the real problem, and that is the mandatory spending.”

And in another sign that rank-and-file lawmakers have moved little from ideological stances taken since 2010, Appropriations Committee Ranking Member Sen. Richard Shelby, R-Ala., on Aug. 1 called for “meaningful spending cuts in mandatory accounts,” meaning entitlement reform.

Democrats largely have opposed deep cuts to such programs; Republicans oppose more new revenues that Democrats want. That divide is a primary reason a grand bargain has remained elusive for nearly three years.

'A Glacier'

Some congressional experts, such as Marcus Peacock, a former Senate Budget Committee minority staff director, remain skeptical that ill will between many Republicans and Obama will recede in time for a fiscal pact to be struck this year.

“This is a glacier that’s going to keep moving slowly across the ground. It’s going to keep being uncomfortable for some,” Peacock said. “There [eventually] will be a deal reached. But I don’t think we’ll have a grand bargain during this presidency.”

Sen. John McCain, R-Ariz., who is emerging as a key figure in the coming talks, told reporters last week he still harbors doubts about “a path to get to a deal.”

But Graham, a close McCain ally, said he now believes the White House and Senate Republicans might be able to reach a deal that addresses a range of problems.

“I’m somewhat encouraged that not only can we replace sequestration, come up with an infrastructure package and lower the corporate [tax] rate, but we can also flatten out the [tax] code to generate revenue and for that, get entitlement reform,” he told reporters July 30.

Graham, in a caveat to his optimism, summarized the general feeling on Capitol Hill last week: “I’m encouraged. But time will tell.”